Business World:
Arggghh, Microsoft!
By Holman W. Jenkins Jr.
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09/16/98
The Wall Street Journal
(Copyright (c) 1998, Dow Jones & Company, Inc.)
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Now we come to the real reason that antitrust cases drag on and on. The Law, meaning our organic system of administrative justice, does not know what to do with the law, meaning our vague history of antitrust impulses. The best solution for all concerned is to engage in endless proceedings rather than let events develop toward some bizarre and destructive outcome.
The lawyers for IBM knew what they were doing: Delay, delay, delay, until Washington came to its senses. Bill Gates, responsible for a thriving, busy enterprise, would be foolish not to do the same. And, to Joel Klein at Justice, what could be more mortifying than the prospect of a court finally gazing upon his months of aimless labor? Even should he win, he can't say what he wants to do with Microsoft.
Justice Potter Stewart once said he discerned no intelligible pattern in antitrust enforcement except that "the government always wins." The government doesn't always win anymore, courts having become more skeptical. But it tells you something that the McDonnell Douglas and Boeing merger could have been waved through under the same laws that once were invoked to prevent a merger of grocery chains because they would have had 7.5% of the Los Angeles market.
The same laws that were soberly and sententiously consulted to allow McBoeing were once soberly and sententiously consulted to block a footwear merger that would have had 2% of the shoe market.
Not that we are complaining, but the lesson here is that the antitrust bureaucracy does what it can get away with. Since nobody can figure out what the law is anyway, enforcers take their cue from the political mood. Waving madly between various formulas and theories that one day mean big business is bad and the next day it's good, the law is not law, but politics and regulation run amok.
Bill Gates would be a fool not to recognize what is going on. The great media eye having fallen on his personal wealth, and many members of the media class being erotomaniacally involved with their computers, he was destined to be our age's target. He will remain the target until the media squirrel gets in its wheel and runs the other way.
IBM fought off the trustbusters for 13 years, long enough for its importance in the computer industry to be nibbled away by nature. If Microsoft cares to survive and experience the same fate, it will dilate and delay, until the zeitgeist decides to go get its kicks elsewhere.
In this Mr. Gates is helped by Mr. Klein, who has been acting like a man alarmed by the approach of an actual trial date.
He has thrown last-minute allegations into the record and broadened his witness list, though his central outrage remains intact: Microsoft sells a product that Microsoft created and owns on terms that are acceptable to Microsoft -- i.e., what every company does. Only if he can attach the lawyerly label "monopoly" can he render Microsoft alone among companies ineligible to act rationally in its own interests.
But so much of his original complaint turns on whether Netscape was somehow cheated out of victory and whether a browser was illegally integrated into the operating system, and this theory has become a thinning reed. Netscape has moved on to a new business model. Nobody any longer questions the technological case for integrating a browser with Windows. Even Larry Ellison of Oracle says the lawsuit is anachronistic: The PC and Microsoft are quickly becoming the "mature" segment of a fast expanding industry.
So Mr. Klein has decided to emotionalize his case. He will drag in Apple, Intel, IBM, RealNetworks, Novell and any other company that faced hard bargaining with Microsoft. Making Microsoft the common denominator makes Microsoft seem uniquely bad and mean.
Good sport that he is, Mr. Gates has not left Mr. Klein to carry the burden alone of expanding the case to unmanageable proportions.
He has spray-painted the world with subpoenas, calling companies to testify about every failed and not-yet-failed collaboration between competitive allies and allied competitors in the computer industry. He wants to show that there was nothing nefarious, or at least nothing unusual, about practices like assigning personnel to work with IBM to develop the OS/2 operating system when, in another corner of his heart, he was assigning a team to develop a Windows operating system.
Every industry from airlines to media to telecommunications does this. It's invariably unsatisfying, because partners at bottom have clashing interests. But it does provide a small measure of insurance when an industry is evolving in rapid and unpredictable ways.
Wonderfully, U.S. v. Microsoft is starting to put on IBM caseload bulk. While some blame the judges, it was the lawyers on both sides who labored to fill up the years between when Johnson holdovers hatched the IBM suit and the Reagan administration quashed it. Thus does our strange and beautiful system work, saving us from even worse.
Energy, passion and money are consumed to no real avail, but at least a useful organism, created by the economy for its own purposes, won't be dismantled or rearranged merely to satisfy the blind career strivings of whoever happens to be passing through the Justice Department's antitrust division at the moment.
In other words, it's good to be a lawyer. It's good to be paid well, to fell trees by the thousands and to waste the daylight hours of so many educated children of the middle class, without lasting effect and for the sake of a gesture.
We'll amend that: It's good assuming you are blessed with a philosophical bent, able to participate in so much intellectual waste, meaningless argumentation and vacuous posturing, and yet see something coming from it that redounds to the credit of the Republic for which it stands.
This is a costly way of dissipating Bill Gates envy, but perhaps less costly than actually doing something destructive to Microsoft.
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Gresham was referring to coinage having an intrinsic value in precious metal when some coins were actually debased -- a situation with no exact parallel today, unless you count the tendency to pick silver dimes out of your grocery change and put them aside.
As the Gresham "effect" applies today, a bad, or weakening, currency is a currency everybody wants to dump on someone else. A good currency is one they want to hold as "a store of value," which is what I actually wrote last week. Sorry if it wasn't clear.
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